Here is a quick assesment of the Utilities sector. PE Ratios are high across the sector. With the exception of TransAlta (TA.TO) earnings growth is poor (<7%), meaning that PEG Ratios are high (>3).
TransAlta’s earnings growth is due primarily to a horrible 2012, wherein earnings fell 50%, meaning that things can only get better. Even if you believe that TransAlta will recover and meet earnings expectations* of $0.89/share in 2013, this still offers only a PE Ratio of 17 (compared with 27 for 2012). Not much of a discount for a stock with a rocky earnings history. Also, earnings are estimated* to fall again to $0.82/share in 2014.
I’m staying away from TransAlta and from the whole sector.
*Consensus earnings estimates for 2013 and 2014 from TD Waterhouse’s webbroker service.